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Charles River Laboratories Slips To Q4 Loss; Guides FY09 - Update

Charles River Laboratories International Inc. (CRL) Monday slipped to a loss in the fourth quarter on charges and lower revenue, reflecting the impact of global economic crisis and the challenges, especially in the PCS segment. Charles River also intends to reduce its headcount by approximately 3% company-wide, mostly in the PCS business segment, expecting a charge in the first quarter of 2009. The company has also provided full-year 2009 financial forecast, which is currently below Street estimates.

Charles River Laboratories International Inc. (CRL), Monday slipped to a loss in the fourth quarter on charges and lower revenue, reflecting the impact of global economic crisis and challenges, especially in the PCS segment. Charles River also intends to reduce its headcount by approximately 3% company-wide, mostly in the PCS business segment. The company expects to take a charge in the first quarter of 2009. The company has also provided full-year 2009 financial forecast, which is currently below Street estimates.

Fourth quarter GAAP net loss of Charles River was $661.88 million or $9.91 per share, compared to net income of $36.91 million or $0.52 per share in the prior-year quarter.

Loss from continuing operations was $662.31 million or $9.91 per share, compared to earnings of $38.95 million or $0.58 per share in the same quarter a year ago.

Quarterly results include a non-cash goodwill impairment of $700.0 million or $10.43 per share in connection with annual assessment of goodwill.

On a non-GAAP basis, net income declined 13.6% to $39.7 million from $45.9 million in the year-earlier quarter. On a per share basis, earnings were $0.59, down 9.2% from $0.65 per share in the prior-year quarter.

On average, twelve analysts polled by Thomson Reuters expected earnings of $0.55 per share for the quarter. Analysts' estimate typically excludes one-time special items.

Non-GAAP results exclude goodwill impairment charge, $7.5 million of amortization of intangible assets related to acquisitions, a charge of $1.9 million as a result of a change in Massachusetts tax law, a benefit of $4.0 million on repatriation of accumulated foreign earnings and a net charge of $2.5 million related to severance costs due to cost-saving actions.

The cost-saving actions are expected to result in a one-time charge of $9.0 million in the first quarter of 2009. The net effect of these charges, which will be excluded from non-GAAP results, is expected to be approximately $0.08 per share.

Net sales for the quarter were down 2.1% at $311.45 million, compared to $318.03 million in the prior-year quarter, below Street estimates of $312.58 million.

Sales for the RMS segment increased 5.3%, while net sales of PCS segment were down 8.3%.

For full-year 2008, GAAP net loss was $521.84 million or $7.76 per share, compared to an income of $154.41 million or $2.25 per share a year ago.

On a non-GAAP basis, net income increased to $199.8 million or $2.89 per share from $180.2 million or $2.62 per share in the prior year.

The Street expected earnings of $2.82 per share for the year.

Net sales for the year jumped 9.2% to $1.34 billion, from $1.23 billion in 2007, in line with Street estimates of $1.34 billion.

James Foster, President and Chief Executive Officer said, "Our guidance for 2009 reflects our expectation that softer market demand, particularly for preclinical services, will persist at least until mid-year."

The company expects 2009 GAAP earnings in the range of $1.86 to $2.16 per share and non-GAAP earnings in the range of $2.30 to $2.60 per share. Analysts' currently expects earnings of $2.62 per share for the year.

Net sales for 2009 are expected to decrease in a range of 2% to 7%.

CRL closed Monday's regular trading at $26.42, down $0.50 or 1.86%, on a volume of $0.96 million shares. In after-hours trading, the stock further declined $0.52 or $1.97%, to trade at $25.90.

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